The Public Sector Accounting Board (PSAB) has released a new public sector accounting standard, PS 2601 Foreign Currency Translation which will effectively supersedes PS 2600 currently dealing with such transactions.
The key changes are as follows:
For government organizations, PS 2601 applies to years beginning on or after April 1, 2012. For governments, PS 2601 applies to fiscal years beginning on or after April 1, 2015. Earlier adoption is permitted. In the fiscal year of adoption, a government organization or a government also adopts Section PS 3450 Financial Instruments.
Specific provisions are provided to facilitate the transition, including the use of the foreign exchange rate at date of transition (instead of the exchange rate at the date of the item's initial recognition) to measure subsequent exchange gains or losses.
The changes will affect public sector organizations with foreign currency transactions.
Management should assess the potential impacts of the new guidance and evaluate the possibility of early adoption. Management should also consider any potential impacts on systems and additional processes needed to compile the information required to comply with the new requirements.